Professor David Harvey on “The Contradictions of Capital”

At the University of Warwick in 2012, Professor David Harvey delivered a lecture titled “The Contradictions of Capital”. He argued that the need for a coherent post-capitalist system today must be in response not only to the nature of capital but in particular to the nature of what Karl Marx called its “contradictions” if we are indeed to “displace, reconfigure” its foundational and fatal systemic features. In this lecture, Professor Harvey discusses the importance of the conception of “contradiction” and what he calls the “foundational basic contradictions” of capital as understood in the context of Marx’s work.

The term “contradiction” in the context of Marx’s work refers not to an Aristotelian sense of absolute exclusion but instead, Professor Harvey clarifies, to an “opposition internal to something with an event, process, a person, a thing which is pulling it in rather different directions and an unstable internal dynamic; an opposition which is internal”. This is what Marx refers when he speaks of “contradictions that are located within a very specific system of the accumulation of capital, the reproduction of capital circulation, and the requirements of that reproduction”. They are the interconnected and sometimes mutually sustaining “underlying dynamics”, “underlying causes” that operates beneath an appearance of the market system that we experience every day– a concealment produced by a process of what Marx further called “fetishism”. For Professor Harvey, there are indeed a total of 17 such contradictions of capital divided into three categories: (1) the foundational basic contradictions (e.g., the capital labor relations), (2) the derivative or manageable contradictions (e.g., the distribution of poverty and wealth) and (3) the three contradictions that are fatal (i.e., the compound growth forever is impossible; metabolic relation to Nature; and universal alienation). In order to see these contradictions, we need to “de-fetishize” what we encounter every day and the reality of our daily life.

“That is, the market that we encounter in our daily lives appear to be this way” but is actually “concealing our whole set of social relations which we don’t see and are terribly important to understand”.

The first contradiction is between that of “use value” and “exchange value”. In thinking for instance on acquiring a house, its “use value” refers to the value of having a space to live in, to remain safe and so forth — its social value. Historically, the “use value” of a commodity, in this case that of a house, has always remained superior to its “exchange value” — the costs of production and acquisition, this has been minimal and limited to purchasing the materials, nails, saws and the volunteer labor from neighbors. Today however, the “use value” and “exchange value” have been reversed: the “exchange value” rather than “use value” has become the driver in the market, such that the acquisition of housing has become entirely predicated on its “exchange value” as an investment and speculation. Since we live in a world where it is not only believed that letting the “exchange value” go free enables the acquisition of “use value”, and also that accumulating “exchange value” is better than enabling “use value”, we have situations where the acquisition of “use value” say of a home becomes inhibited by a person’s propensity in obtaining “exchange value”.

The secondary contradiction is between that of “money” and “value”. Professor Harvey argues that “exchange value” is only possible where it can be converted and quantified into a means for objective measurement— in the history of capitalism this has been accomplished with different money forms. In quoting Marx, Professor Harvey explains that since value is a “social relation” it is “immaterial”, it thus needs to be converted or represented in material form to measure it objective value. The problem with money is that it does not fully represent the value of its object fully (e.g., like maps and geography); money is both a falsifying and truthful representation of social value. Furthermore, if “social relations” are involved in “value” and money allows persons to “appropriate social value as a form of power”; money can be a claim on “social labor”.

The third contradiction is between that of “private property” and the “state”. In order for the conditions of exchange of value to be possible, there needs to be “unambiguous property rights over whatever is being exchanged”. Here, Professor Harvey contends that because property rights are held in perpetuity, the money-forms need also be held in perpetuity as an appropriate form of medium for exchange. This concept of private property is held in contradiction with the need for a capitalist state. In order for the conditions of private property rights to exist, legal and state institutions are required to maintain as well as guarantee the rights and contracts of private property rights holders.

The fourth contradiction is between that of private appropriation and commonwealth. The issue resides not only in the state monopoly over “the use of violence” but also “the monopoly over the money-form”. The money form, argues Professor Harvey, possesses a number of functions, namely (1) that of a medium of circulation, (2) as a store of value and (3) also a measure of value. The first function is largely neutral, however because a capitalist market is predicted on compound growth and accumulation, the medium of circulation must be something that is solid or material based (hence its connection with gold and silver as un un-oxidizable materials). The second feature of store value is also what permits it to store social power. Professor Harvey argues that “private persons [can] appropriate social power in such a way to form a class of privileged population who have immense power in money form”.

The fifth contradiction is between that of capital social relation and labor social relation. The creation of class politics leads to the problem of further accumulation of wealth and power and thus the exploitation of labor and the labor process achieved through not only the “primitive accumulation” of wealth but also through the “accumulation by dispossession”.

The sixth contradiction is between that of equality and inequality. In quoting Marx, Professor Harvey argues that the problem is that if circulation is occurring in an imperfectly functioning market, then capital cannot be accumulated through circulation. There is an inherent equality condition required for a perfectly functioning market, i.e., a “like-for-like” condition of exchange. Capital is however about accumulation, and therefore an “inequality must emerge from a condition of equality”; the condition of inequality comes from the “commoditization of labor power” and asset market acquisitions.

The seventh contradiction is between that of production and realization.This contradiction is about what Marx called the contradictory unity between the crisis in production and that of realization — both are exclusive, although in an un-resolvable dialectical connection. On the one hand, there are the conditions for the production and reproduction of surplus value as well as its class relations. If the crisis occurs at the level of production, you eventually have the increasing disparity between an accumulation of wealth on one end and degradation of the working class poverty on the other end. To resolve the crisis, one needs to suppress and the subjugation of the working class to abject poverty. On the other hand you have the conditions for the realization of value. This secondary crisis of realization occurs when capitalists try to “depress” the “wage rates of those they employ” which by doing so “undermines their own market”. When this occurs, there emerges a crisis out of realization of value. In the latter crisis of realization, you see the need to empower the working class with unions, strikes and political parties to sustain one dialectical equation of capital; the demand side of economics. In the former crisis of production, you have a disempowering of the latter unions and a return to a financial supply side of economics. How can we achieve “use value” through both production and realization?

“What you actually find is a situation in which the surplus may be produced here, but it can be [taken] by the banks, the merchant capitalists, the landlords, by the state. […] The working class can fight for higher wages at the point of production, it can in certain circumstance get higher wages, and then it goes back and suddenly find its rents have gone up. The bourgeoisie loses money at the point of production, and regains it at this other points. Exploitation in the field of realization has a completely different logic and is not associated with the point of production in the same way as the creation of value is associated with the point of production”.